The Value Added Tax, or VAT, is a broadly based consumer tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in a community. It should be noted that, even when a person can claim a refund of a VAT, the person is nevertheless required to pay the VAT at the point of purchase and subsequently reclaim the VAT paid retroactively.
The laws and regulations of many countries allow foreign travelers the right for reimbursement or a refund of certain taxes such as, e.g., VATs paid for goods and/or services abroad. As such laws and regulations are different from one country to another, determination of the actual VAT refunds that one is entitled to receive often requires that the seeker of the refund possess a vast amount of knowledge in the area of tax laws abroad. Moreover, travelers may seek refunds for VATs when they are not entitled to such refunds, thereby spending time and effort on a fruitless endeavor. Further, availability of the VAT refund may vary based on the type of purchase made and the presence of a qualified VAT receipt.
One procedure to request a refund is to physically approach a customs official at an airport, fill out a form, and file the original receipts respective of the expenses incurred during the visit. This procedure should be performed prior to checking in or boarding to the next destination. Additionally, particularly with respect to goods purchased abroad, the procedure to request a refund may require that the payer show the unused goods to a custom official to verify that the goods being exported match the goods that the payer paid VATs on.
As travelers are not familiar with specific laws and regulations for claiming a refund, the travelers may claim for a refund even though they are not eligible. This procedure further unnecessarily wastes time if the traveler ultimately learns that he or she is not entitled to a refund.
It would therefore be advantageous to provide a solution that would allow to predict the likelihood of success of a potential VAT reclaim.